Question

Present the issues related to Korean corporate finance

Answer 1

1. Over expansion of corporate investment: It will result in twin balance sheet issue duwe to which the balance sheet of the company will remain impaired and they will not be in the condition to borrow from the bank. The bank will also nit in aposition to lend them more due to the twin balance sheet issue. Thus, if there will be no capital then there will be no investment. and, this issue is increasing day by day.

2. Over valued exchange rate: It will reduce the export competitiveness which means Korea is not in position to export more which will make the corporate's business down, thus, leaving the corporates in the situtaion of loss.

3. Increase in wage rates: The Korean corporate is regularly dealing with the increase wage rates which left the companies with no profits. As labour is most important asset of the company and in Korea the wages are so high that it is becoming difficult for the company to earn profits. That's why the Korea corporates are declining.

4. Asset inflation: Asset inflation results in high real estate prices, high rental prices which also results in high wages because of high value of every asset.